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How Gift Aid works

The Gift Aid scheme is for gifts of money by individuals who pay UK tax. Gift Aid donations are regarded as having basic rate tax deducted by the donor.

Charities or CASCs take your donation (which is money you've already paid tax on) and reclaim basic rate tax from HM Revenue & Customs (HMRC) on its 'gross' equivalent - the amount before basic rate tax was deducted.

Basic rate tax is 20 per cent, so this means that if you give £10 using Gift Aid, it's worth £12.50 to the charity. For donations between 6 April 2023 and 5 April 2023 the charity or CASC will also get a separate government supplement of 3p on every pound you give.

• Working out income from employment for your tax credits claim

How to make a donation using Gift Aid

In order to make a Gift Aid donation you'll need to make a Gift Aid declaration. The charity will normally ask you to complete a simple form. One form can cover every gift made to the same charity or CASC for whatever period you choose and can cover gifts you have already made and/or gifts you may make in the future.

A Gift Aid declaration must include:

• your full name
• your home address
• the name of the charity
• details of your donation, and it should say it's a Gift Aid donation

Gifts made jointly by people living together

You can use Gift Aid for gifts you make jointly if you tell the charity or CASC how much each of you is giving and if you each make a Gift Aid declaration.

Making sure you've paid enough tax to use Gift Aid

You can use Gift Aid if the amount of Income Tax and/or Capital Gains Tax you’ve paid for the tax year in which you make your donation is at least equal to the amount of basic rate tax the charity or CASC and any other charities or CASCs you donate to will reclaim on your gift. A tax year runs from 6 April one year to 5 April the next.

If you make a number of Gift Aid donations, you will need to consider the tax you’ve paid on each donation on an accumulative basis. If you don’t pay enough tax you will need to pay any shortfall in tax to HMRC.

You don't necessarily have to be working to be paying tax. Apart from tax on income from a job or self-employment, the tax you've paid could include:

• tax deducted at source from savings interest
• tax on State Pension and/or other pensions
• tax on investment or rental income (including tax credits on UK dividends)
• Capital Gains Tax on gains

Other taxes such as VAT and Council Tax do not qualify, nor does any non-UK tax.

How to check if you've paid enough tax

To work out if you've paid enough tax to cover your donations, divide the donation value by four. For example, if you give £100 in a particular tax year you will need to have paid £25 tax over that period (£100/4 = £25). (Note that this calculation is based on the basic rate tax of 20 per cent.)

If you don't think you've paid enough tax this year, you may be able to backdate your donation. See the later section 'Backdating Gift Aid donations to the previous tax year'. If you make a Gift Aid donation(s) and have not paid enough tax you may have to pay the shortfall to HMRC.

Claiming back higher rate tax

If you pay higher rate tax, you can claim the difference between the higher rates of tax (40 and/or 50 per cent), and the basic rate of tax (20 per cent), on the total 'gross' value of your donation to the charity or CASC.

For example, if you donate £100, the total value of your donation to the charity is £125 - so you can claim back:

• £25 - if you pay tax at 40 per cent (£125 at 20 per cent)
• £37.50 - if you pay tax at 50 per cent (£125 at 20 per cent plus £125 at 10 per cent)

You can make this claim on your Self Assessment tax return, if you were sent one. For more information see the section below, ‘Telling HMRC about your Gift Aid donations’.

Carrying back Gift Aid donations to the previous tax year

You can ask for Gift Aid donations to be treated as being paid in the previous tax year, but you must have paid enough tax in that year to cover any Gift Aid donations you made plus the ones you want to backdate.

Your request to carry back the donation must be made before (or at the same time as) you complete your Self Assessment tax return for the previous year. It must not be made later than the filing deadline for the tax return. This is 31 October if you file a paper tax return, or 31 January if you file online.

If you don’t complete a tax return you can ask your Tax Office for form P810 Tax Review – to be sent by no later than 31 January after the end of the tax year to which you wish to backdate your gift.

Example

Mr Jones makes a Gift Aid donation of £1,000 on 1 June 2009.

He can either treat the donation as being for this tax year (2009-10) or carry back the relief to last tax year (2008-09). As he paid enough tax last year to cover both last year’s donations and this one, he chooses to carry the relief back. He hasn’t yet completed a tax return for 2008-09 so he makes his carry back election and claim on that return and files it online before 31 January 2010.

But if Mr Jones had already sent back his tax return for 2008-09, he would only be able to ask for the donation to be treated as Gift Aid for the year 2009-10. You can’t change a tax return in order to carry back a donation.

Gift Aid - effect on age-related Personal Allowance, age-related Married Couple's Allowance or tax credit claims

If you claim the age-related Personal Allowance, Married Couple's Allowance or tax credits it's important to let HMRC know about any Gift Aid donations.

HMRC will subtract the amount you donate plus the basic rate tax from your total income and use the reduced figure to work out the value of your allowances or tax credits.

This may have the effect of increasing these allowances or credits if your income was above the relevant 'income limit' that applies.

Follow the links below to find out more about these income limits.

• Married Couple's Allowance (includes civil partnerships)

• Working out income from employment for your tax credits claim

Telling HMRC about your Gift Aid donations

It’s important to keep a record of the total amount of your Gift Aid donations for each tax year. You’ll need to let HMRC know about your Gift Aid donations if:

• you claim age-related Personal Allowance, Married Couple’s Allowance or tax credits
• you pay higher rate tax
• you want to carry back a Gift Aid donation

If you normally complete a tax return you can tell HMRC about your Gift Aid donations by completing the section on Gift Aid payments.

If you don’t complete a return, you can give the details on form P810 Tax Review - available from your Tax Office, or telephone your Tax Office and ask them to make a change to your tax code.

• Contact details for all Tax Offices Opens new window

• Making a change to your tax code

Contacting the HMRC Charities Helpline

For more help you can contact the Charities Helpline.

• Contact the Charities Helpline Opens new window

More useful links

• Giving to charity through your company Opens new window

Useful contacts

• Money, tax and benefits contacts